Leading neuromodulation company,
) is scheduled to report its first quarter fiscal 2013 results
before the market opens on Tuesday, August 28, 2012. The company
expects earnings per share (EPS) of 36 cents on revenues of $58
million during the quarter, according to the Zacks Consensus
Cyberonics exceeded its expectations in the last four quarters.
Over the past four quarters, average earnings surprise is a
positive 15.73%. This implies that the company has surpassed the
Zacks Consensus Estimate by this magnitude over the last four
Previous Quarter Highlights
Cyberonics reported EPS of 38 cents in the fourth quarter of
fiscal 2012, up 46% year over year and surpassing the Zacks
Consensus Estimate of 35 cents. For the full year, EPS came in at
$1.28, a penny short of the Zacks Consensus Estimate but ahead of
previous year's adjusted EPS of $1.01.
Revenues increased 13% year over year during the quarter to $58
million, marginally beating the Zacks Consensus Estimate of $57
million. Cyberonics recorded robust growth in U.S. epilepsy sales
(up 10% to $48 million) and international sales (up 33% at constant
exchange rate or CER to $9 million). The company provides the vagus
nerve stimulation ("VNS") therapy for treatment of refractory
epilepsy. During fiscal 2012 revenues were up 15% to $219 million,
ahead of the Zacks Consensus Estimate of $217 million.
Cyberonics also provided guidance for fiscal 2013. The company
expects to report revenues of $241−$244 million and $70−$72 million
of income from operations resulting in EPS of $1.49−$1.59.
The company noted that the anticipated amount of medical device
tax, scheduled to be implemented from January 1, 2013, has not been
considered in the guidance for income from operations but included
in the EPS forecast.
Agreement of Estimate Revisions
Estimate revision trends among the analysts for the first
quarter and the full fiscal year 2013 have been insignificant. Out
of the nine analysts covering the stock during the quarter, only
one analyst made a downward revision over the past 7 and 30 days,
while no upward revision took place. The current fiscal year has
experienced no estimate revision from the nine analysts covering
the stock over the past 7 and 30 days.
We expect unfavorable currency to adversely impact Cyberonic's
first quarter performance. Moreover, the company's prominent
presence in the European market, which is shrouded with
macroeconomic challenges, might affect the company's sales growth.
The analysts await better visibility on this matter.
However, they are encouraged with the company's persistent
revenue growth in the under-penetrated field of refractory epilepsy
and treatment-resistant depression (TRD) on the back of the
company's proprietary Vagus Nerve Stimulation (VNS) Therapy System.
The analysts believe that as the first implantable medical device
to receive FDA approval for the treatment of epilepsy, VNS Therapy
system should help the company sustain its growth rate in the
Moreover, they are also encouraged with Cyberonics' improvement
in the international business. Data shows that the company has
encouraging prospects in these regions, especially in Europe and
Japan. The recent World Health Organization study on Epilepsy
revealed that there are over 3.0 million individuals with epilepsy
in Western Europe, with over 150,000 new cases diagnosed each
Magnitude of Estimate Revisions
Given the dearth of estimate revisions, the consensus estimate
for the current quarter remained static at 36 cents over the past 7
days and one month. The consensus estimate for fiscal 2013 also
remained unchanged at $1.56.
Cyberonic's strong position in the epilepsy market is evident
from a consistent increase in new patients over the last three
years. Additionally, the company's investments in market
development in Europe are encouraging. In order to expand its
international base, Cyberonics is strengthening its pipeline as
well as investing in sales and marketing. However, we are
apprehensive of the ongoing macroeconomic headwinds. Moreover, the
company is posed with stiff competition with the presence of
players such as
St. Jude Medical
Cyberonics currently retains a Zacks #1 Rank ("Strong Buy" in
the short term).
CYBERONICS INC (CYBX): Free Stock Analysis
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis
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